Bill S4728A-2011

Provides for a sales tax exemption for farm abstracts

Exempts from sales tax the sale of an abstract of title to real property to be used for agricultural purposes to either a prospective purchaser of real property or to an attorney representing a prospective purchaser.

Memo

TITLE OF BILL: An act to amend the tax law, in relation to providing for a sales tax exemption for farm abstracts

PURPOSE: To clarify that sale of abstracts of title to land used for agricultural purposes are not subject to sales tax.

SUMMARY: Section 1 amends Paragraph 1 of Subdivision (c) of Section 1105 of the Tax Law to provide an exclusion from the four percent tax for sale of an abstract of title to real property used for agricultural purposes.

Section 2 - This act shall take effect on the same date and in the same manner as Section 3 of Chapter 583 of the Laws of 2011.

JUSTIFICATION: Agriculture is a land intensive business which makes sales tax on abstract services, property taxes and other land-related tax issues a substantial business expense. The purchase or sale of land requires an abstract of title which provides a condensed history of all deeds, mortgages and other recorded documents pertinent to the land parcel being transferred to new ownership. Before the sale of land can be concluded, the abstract of title is reviewed by an attorney or insurance company to determine if there are any outstanding liens or mortgages that must be satisfied before the buyer can claim ownership.

Securing the abstract of title for a piece of real property to be included in a farm operation is a costly business expense for farmers which was partially defrayed by a state sales tax exemption until last year. Sale of an abstract of title was not considered sale of a taxable information service until the NYS Department of Taxation and Finance rendered an Opinion (TSB-M-10(07)S in 2010 revoking it's long standing policy of exempting the sales of abstracts of title from state sales tax in an effort to generate additional revenue for the State. This legislation will protect valuable working landscapes, open green spaces and farm viability by statutorily restoring the tax exemption for sales of abstracts of title to farm land.

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: To be determined.

EFFECTIVE DATE:

This act shall take effect on the same date and in the same manner as Section 3 of Chapter 583 of the Laws of 2011.

Text

STATE OF NEW YORK
________________________________________________________________________
4728--A
2011-2012 Regular Sessions
IN SENATE
April 15, 2011
___________

Introduced by Sen. RITCHIE -- read twice and ordered printed, and when
printed to be committed to the Committee on Agriculture -- recommitted
to the Committee on Agriculture in accordance with Senate Rule 6, sec.
8 -- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee
AN ACT to amend the tax law, in relation to providing for a sales tax
exemption for farm abstracts
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph 1 of subdivision (c) of section 1105 of the tax
law, as amended by chapter 583 of the laws of 2011, is amended to read
as follows:
(1) The furnishing of information by printed, mimeographed or multi-
graphed matter or by duplicating written or printed matter in any other
manner, including the services of collecting, compiling or analyzing
information of any kind or nature and furnishing reports thereof to
other persons, but excluding the furnishing of information which is
personal or individual in nature and which is not or may not be substan-
tially incorporated in reports furnished to other persons, and excluding
the services of advertising or other agents, or other persons acting in
a representative capacity, and information services used by newspapers,
electronic news services, radio broadcasters and television broadcasters
in the collection and dissemination of news, and excluding meteorologi-
cal services, AND EXCLUDING THE SALE OF AN ABSTRACT OF TITLE TO REAL
PROPERTY TO BE USED FOR AGRICULTURAL PURPOSES TO EITHER A PROSPECTIVE
PURCHASER OF REAL PROPERTY OR TO AN ATTORNEY REPRESENTING A PROSPECTIVE
PURCHASER.
S 2. This act shall take effect on the same date and in the same
manner as section 3 of chapter 583 of the laws of 2011.

EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10930-02-2

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